Abstract
The present paper assesses whether the adoption of Industry 4.0 technologies can be related to backshoring. It does so by -firstly- investigating the implementation of such technologies by industrial firms with foreign production plants, the experiences and intentions of these firms regarding the location of production activities, and -secondly- by analyzing backshoring cases among them.It finds that backshoring is a rare phenomenon, and it is questionable whether there is a correlation, left alone causality, between the adoption of digital technologies in home-based manufacturing sites and backshoring hitherto. And while the future may hold more backshoring movements in store, they may not be primarily due to the adoption of Industry 4.0 technologies at home-based plants. Instead, other (foreign) location-specific factors seem to have greater weight in the decision-making processes around backshoring operations. I.e., deteriorating sales forecasts in offshore places where firms have production activities, increases in institutional uncertainty in such places, rationalization of global production apparatuses, and/or a lack of possibilities to deploy foreign manufacturing activities and output for third markets. Also against the backdrop of events like the outbreak of Covid19 and the uncertainty-raising effect it has on international business, the trade-off between producing off-shore or bringing manufacturing activities back home is not likely to depend on technology adoption levels at home and abroad either.
Highlights
A growing body of literature is looking into the impact of digital technologies on the course of international business (Van Tulder et al 2018)
As regards the adoption of digital technologies on behalf of the 63 companies that make up our sample, we found the following: With regard to the nine technologies that were considered, over 95% has adopted at least one of them and close to two-thirds of the companies had implemented four or more Industry 4.0 technologies (See Fig. 1)
The percentages are slightly higher than for the Industry 4.0 technology selection, which is arguably related to the fact that some technologies are more mature or lower entry
Summary
A growing body of literature is looking into the impact of digital technologies on the course of international business (Van Tulder et al 2018) As part of this stream of research, there is growing scholarly interest in investigating how advanced manufacturing technologies influence the geographical location of production activities. Dachs et al (2019) assert that Industry 4.0 and local manufacturing strategies could have a substantial impact on backshoring in upcoming years. They call for new insights to evaluate the relationship between backshoring of production activities and investment in Industry 4.0 technologies at European manufacturing firms
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